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MasterCard Faces EU Antitrust Probe

Investigation involves bank fees on card payments made by customers based outside of EU.

MasterCard Inc. is under investigation by the European Union over the bank fees it charges on credit- and debit-card payments made by customers based outside the 27-nation bloc.

The European Commission, the EU’s competition watchdog, said it opened a probe into possible “competition distortions” in interbank arrangements on fees and other practices at a time when European consumers and businesses are making more than 40 percent of their non-cash payments a year by card. Preventing such violations is a priority, it said.

“Such fees apply for example when a U.S. tourist uses his MasterCard credit card to make a purchase” in Europe, the commission said in a statement today. Charges for processing foreign payment are much higher than for ones made with cards from within the EU, spokesman Antoine Colombani told reporters in Brussels.

The probe increases the pressure on the Purchase, New York-based company over card charges in Europe. The company faces about a dozen lawsuits in the U.K. over cross-border fees and a previous EU decision in 2007 found that MasterCard unfairly inflated the transaction fees paid by retailers for processing payments. The regulator will also examine MasterCard rules applying to merchants’ transactions that limit them from benefiting from better conditions by banks elsewhere in the EU.

“MasterCard intends to fully cooperate with the commission,” it said in an e-mailed statement. “As a global electronic payments company MasterCard always aims to balance the interests of both consumers and retailers to ensure that each party pays its fair share of the costs for the benefits it receives.”

The commission also said that in addition to the antitrust probe, it plans to propose rules before the summer that seek to create more certainty on interbank fees across the EU.

Visa Europe Ltd., operator of the EU’s largest payment-card network, is also being investigated and was sent an antitrust complaint over its cross-border credit-card payment fees by the commission last year.

The 2007 commission decision against MasterCard was backed by the EU General Court last year. MasterCard is appealing the ruling at the EU’s highest court.

MasterCard, the second-biggest card network, supported by banks including HSBC Holdings Plc and Royal Bank of Scotland Group Plc, previously argued the so-called multilateral interchange fees are crucial for sharing the costs of debit and credit card payments.

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